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Workers Compensation classification



Workers Compensation classification

by Jon Morgan 1. June 2012 16:07

If you carry workers compensation insurance, maintaining detailed records can make a big difference to your bottom line profit.  As an example, a contractor that is a sole proprietor & wants to include himself on the workers compensation coverage will need to insure themselves for (depending on the state) $47,000 – $52,000 of owner salary regardless of whether they actually make this amount of net income or not. As an owner, your net income may be only $35,000. You will still need to insure for your states workers compensation owner minimum.

He's Safety Minded!

The owner salary minimum requirement depends on your state and your company setup. As an example, the State of Illinois requires sole proprietors to insure for 50,800 (assuming they choose coverage that is). For corporations in Illinois, the required officer minimum workers compensation is $20,800.

Most small business owners wear many different hats. You are doing your craft as well as doing paperwork & returning phone calls. You may run to the local hardware store to pick up some supplies or tools. So as an owner there are many different types of tasks that you’re actually doing. Correct classification on your workers compensation policy will save you mega dollars!!

Many workers compensation policies are setup incorrectly.  The owner is 100% in one classification (usually in the highest risk class). So if you are a residential homebuilder, this could be costing you a couple G’s per year. And that’s just the extra cost on you. Now imagine that you have 7 employees. And if each employee is classified 100% properly, you could be paying through the nose. If you need help determining if your workers compensation classification, has been setup correctly be sure to get in touch with us at


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